Unearned Discount


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Unearned Discount

A finance charge a lender assesses at the beginning of a loan, but only recognizes as income gradually over the loan's life. In accounting, the unearned discount is listed at first as a liability on the lender's balance sheet, but is slowly recognized as income.
References in periodicals archive ?
An automated business-rule capability with algorithm-based problem detection and exception-based reporting can monitor and highlight those exceptions likely to result in late pays, chargebacks or unearned discounts.
Moreover, the dissent refused to accept the promissory note as a mere collection mechanism for unearned discounts. It found that a liquidated damages clause in the supply agreement provided a remedy for its own breach, which demonstrated that the repayment obligation under the promissory note remained independent of (albeit linked to) the supply agreement.
Let's begin with the principle, that what we might call indirect or unintentional promotional funding (slotting allowances, abuse of unsaleables policies, unearned discounts, deductions and all the other dark demons of the 1980s and 1990s), which ought not to be the basis of profitability.
Do unearned discounts age out in the reporting of DSO?
If left unchecked, your company could be losing millions of dollars a year with these unearned discounts.
* Coding, tracking and rolling up deductions or unearned discounts is impossible.